Immigration, Innovation, and the Geography of Growth

Costas Arkolakis, Sun Kyoung Lee and Michael Peters

No 21668, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Between 1880 and 1920, more than 20 million immigrants settled in the United States. We study how this migration wave affected innovation and growth. Using a newly constructed dataset linking individual census records to historical immigration records and the universe of US patents, we highlight a new channel through which immigrants contributed to growth: they disproportionately settled in urban innovation hubs. To quantify the aggregate and regional effects of this mass migration episode, we develop a new spatial growth model in which skilled workers have a comparative advantage in innovation and sort endogenously across space. We find that international arrivals after 1880 raised US income per capita by 8.2\% by 1940. Removing the subsequent immigration restrictions of the 1920s would have raised income per capita by a further 1.7\% by 2000. Immigrants' skill composition and their concentration in urban hubs are key drivers of these effects.

Date: 2026-06
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